Netherlands-Belgium Trip Report June 27 to July 8, 2011

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1 Netherlands-Belgium Trip Report June 27 to July 8, By Gordon Murray, July 23, I visited the Netherlands and Belgium from June 27 to July 8. The main purpose of the trip was to attend and present at the AEBIOM European Biomass Conference in Brussels and to attend the European Pellet Council meeting following the conference. The following summarizes my trip: June 27 Visit to OVET B.V. in Vlissingen, NL I visited Bram Peters and Sander van der Veek at OVET. OVET is the stevedoring company in the south of the Netherlands, founded in 1957, situated on both sides of the estuary of the Western Scheldt estuary and specializes in the transhipment, storage and processing of bulk products, including wood pellets. Its main customers are steel companies, power stations and traders. OVET distinguishes itself from other stevedoring companies by only making use of floating / mobile loading and unloading installations in order to make transhipment of the products in the Western Scheldt estuary and in all the Scheldt ports and docks possible. I will be writing an article on OVET for publication in the next issue of Canadian Biomass Magazine. OVET s floating cranes lightening a load of coal 1

2 Overview of OVET Terminal at Vlissingen Wood pellet unloading at OVET June AEBIOM European Pellet Conference in Brussels Key conference messages were: National renewable energy action plans have been submitted to the European Commission by all 27 EU member states. Under the plans, biomass is set to increase from 85 million tonnes oil equivalent in to 138 million toe by 2020 for all sectors (electricity, heat, and transportation). Biomass use in the electricity sector is to double. 2

3 Biomass in 2020 versus Argus discussed its wood pellet index. Pellet prices have increased recently Aug Sep Oct Nov Dec Jan Feb Mar Apr May Argus Wood Pellet Index CIF Delivery ARA / t EN Plus pellet quality certification is being implemented in Europe in the heat sector. The forecast is for 3 million tonnes of EN Plus pellets by the end of. The power sector has defined 3 industrial pellet qualities I, I2, I3 to facilitate trade. There is a new EUproject PellCERT for the development of an 3

4 ENplus compatible certification scheme for industrial quality pellets. The parties involved are AEBIOM, 10 national pellet associations, and the power sector. The European Commission is re-evaluating the need for mandatory sustainability criteria at the EU level. There is significant pressure from the power sector and biomass associations for standard sustainability criteria. Forest certification will only partially satisfy the requirement, which will need to be supplemented by calculations of GHG savings, and considerations of competition for food, local prosperity, and well-being of workers and local population. The EU has already recognized a number of certification schemes. Justification for sustainability criteria June 30 European Pellet Council Meeting in Brussels Summary of proceedings: Spain and Italy have joined Germany and Austria in having national rights to EN Plus. WPAC declared its intention to apply for national rights to EN Plus. A presentation was given on the German sustainability scheme ISCC. IPC plans to write a letter to European Council supporting mandatory sustainability criteria. 4

5 IPC is pursuing EU funding for PellCert so as to have funds to work on industrial pellet certification using a system similar to EN Plus. The US Industrial Pellet Association was accepted as an observing member. July 4 VIGAN Engineering, Nivelles Belgium I met with Mohamed El Khattabi, Senior Sales Manager, and Luc Sallets, General Manager. VIGAN is a manufacturer of pneumatic and mechanical barge and ship loaders and unloaders with over 1,100 installations worldwide. They supplied the pellet unloaders for Electrabel in Belgium and are presently constructing the pellet unloader for RWE s Tilbury Power Station in the UK. VIGAN has been monitoring the WPAC website and learned about our activities in Prince Rupert and in Korea. They are interested in supply unloading equipment for those locations. I will be writing an article on VIGAN for an upcoming issue of Canadian Biomass Magazine. VIGAN pneumatic ship unloader 5

6 VIGAN mechanical ship unloader July 5 Rotterdam Bulk Terminal Mieke Vandewal of Control Union and I met with Carolina Broers-Keuning, General Manager, and Boris Sviderski, Sales Manager. RBT is a traditional bulk terminal facility located on the North Bank of the Maas River. RBT s focus is on the handling and storage of bulk commodities, mainly dry minerals. The lay-out of the terminal, combined with the type of gantry-cranes, allows the handling of a great variety of bulk products. In addition to wood pellets, the terminal handles coal, cokes, salt, china clay, fertilizers, bauxite, magnesite and bentonite. Unloading MV Dmitriy Pozharskiy at Rotterdam Bulk Terminal 6

7 July 5 Control Union and European Bulk Services, Rotterdam I had lunch with Mieke Vandewal of Control Union and Frank van der Stoep, Sales Manager for European Bulk Services. We discussed the potential for EBS to invest in Eastern Canadian storage and loading facilities and for them to assist in aggregating production from the many small Eastern Canadian pellet producers for efficient handling and marketing to European utilities. Later, Mieke Vandewal and I discussed strategies for implementation of EN Plus pellet certification in Canada. I advised her that we would also be working with SGS, who is also a WPAC member. July 6 APX ENDEX, Amsterdam I met with Sipke Veer, Product Manager to discuss the proposed new pellet futures market to be operated by APX ENDEX. I have written an article on this for the next issue of Canadian Biomass Magazine. The idea for APX-ENDEX s pellet exchange began three years ago. In 2008 APX ENDEX established a pricing panel and began publishing wood pellet prices to increase price transparency. Using input from a 14-member pricing panel, they track prices of future contracts on a three month, three quarter, and three year basis and publish the prices on the APX ENDEX website. In, APX-ENDEX and the Port of Rotterdam jointly conducted a feasibility study which concluded that there was a need for exchange traded biomass products. They immediately set out to prepare a business plan. As of July, a number of details remain to be worked out. Standard pellet quality specifications must be finalized. Progress has been made in consultation with the Industrial Wood Pellet Buyers Group (made up of seven large European utilities) and pellet producers; Sustainability criteria must be defined. Possibilities include using a certification system from one or more of the utilities, or a more universal certification scheme such as the Dutch NTA 8080; 7

8 A standard contract must be adopted, similar to the ones used in the coal industry (Standard Coal Trading Agreement) or the grain industry (Grain and Feed Trade Association Standard Contract); The standard contract lot size must be chosen. For example, a standard coal futures contract on the New York Mercantile Exchange is 1,550 tons; Due to the fact that APX-ENDEX is a regulated exchange, trading rules must be offered for approval to the regulator: the Netherlands Authority for Financial Markets; Exchange member accession procedures must be defined; APX-ENDEX has decided upon a 2-phased approach for the launch of the exchange. Initially, trading will be take place twice weekly with each session lasting five hours. Contract terms will be for three months, three quarters, or three years. APX-ENDEX will not initially act as a clearing house. Instead, once each trading session is finished, the counterparties will be made known to each other and trades will be physically settled between them. Once the concept has been proven successful, then APX-ENDEX will begin providing clearing services and effectively act as the counterparty to each futures contract. The APX-ENDEX pellet exchange should provide an excellent opportunity for all participants to reduce risk by hedging, to improve liquidity and to increase confidence that their transaction prices reflect real market values. 8